Welcome to Retire Smart Austin. My name is Cynthia De Fazio joined today by Phil Capriatti, senior of Empower Wealth and Tax and viewers at home. We’re talking all about risk today. Do you know your risk tolerance? Stay tuned. Phil, how are you?
Oh, good morning, Cynthia. I am doing well. How about yourself?
I am doing fantastic. Thank you. And I love the fact that we coordinated a little bit today without even talking about
Unintentional it’s perfect. It’s the mind it’s the mind Quebec connection.
We love it.
Was the mind meld?
Well, Phil, I have to ask you, I know that you’ve been extraordinarily busy. Obviously, people are coming into the office, they’re seeking your guidance. They want to sit with your team and ask you a lot of questions about how to plan for their own retirement. But I have to ask you, how are you balancing it all, because I know that you set aside a specific number of spots for new viewers. But you also have your existing clients that want to sit with you as well, from time to time, how’s that going?
I normally see eight, anywhere from seven to 10 clients a day. And I like to mix in my client reviews because my personal client, my personal clients that I clients that I worked with for over 10 years, I still see them on a regular basis. And so, I’ve also added additional investment advisors to take on some of the newer clients after they go through our extensive training. So, if, if an individual calls and let’s say their portfolio is under 500,000, they’ll be working with a certain group of financial advisors, tax advisers and so forth. Okay, if their portfolio is in that 500 to a million, we have a, we have another group, anything from the 1,000,005 tenant, and up, my son Philip will see in a one to 2 million range, you’ll see it pretty much anyone but and then I’ll normally focus on extremely high net worth individuals because they need more advanced tax planning. So, so basically, we’ve and this is the reason we only take five callers each, each and every week, what we want to do is we want to make sure that our existing clients that have been with us for decades, get the same service that they’ve always expected, I believe that you should treat your existing clients as well or even better than new clients. Some advisors go the other way on that. Because the majority of our business comes from our new clients come from about 40 or so percent existing client referrals. And, and then and the other is from new clients, new folks who are getting ready to retire thinking about retiring. And they really don’t have a clue about tax planning or even, even managing risk and retirement. So, it’s been good, and it’s been easy. So, and then I make sure I have three days to play a little golf, spend time with Mama. Just have fun. And then the one last thing is I told I told my wife; she says When are you going to retire? So, honey, we are retired? And she says but you work every day I said, but there’s not really work. Okay, it’s really fun. We do a lot. So, we just take more vacations. So, plan our vacations are planning to work around them.
Well, there you go. That’s perfect, great balance. And also, let’s talk briefly about your seminars that you do as well, because I know those are filled to capacity with a lot of interesting topics. So, let’s talk about those events.
Yeah. Now what we do is our workshops, the workshops that we have been doing over the last close to 15 years now are educational, but we don’t do dinner workshops, except the only time we’ll do a dinner workshop is with the members up at Horseshoe Bay Resort the MGA and the Women’s Golf Association as well. So, since we just opened up our satellite office there, that’s really my office. So, what we do is and because we belong to the Horseshoe Bay Resort, I like to patronize the Yacht Club, their food is great. Okay, service is fantastic. So that’s kind of not like having a dinner workshop on kind of patronizing. Yes, it’s the people that we’ve, we’ve learned to grow in love with. So, they’re all educational. They’re designed to to day focus on tax efficient retirement planning, and anyone that goes to those workshops, also gets two to three complimentary interviews, just the same as a as with our TV and radio audience. It’s been a lot of fun and we’re really enjoying it. We don’t seem to be slowing down Oh, we just keep putting on new offices and hiring and training new advisors.
I love it. I love it. Phil, I want to talk to you a little bit about risk tolerance. I know our viewers at home a lot of times when you ask that question, what is your risk tolerance? Most people would say, Oh, I don’t know, I’m moderate. But what does that even mean? And how do you help establish someone’s risk tolerance? I know there’s a lot of questions that are probably involved when people come in to sit with you for the first time.
Well, with as far as suitability, they tell us that we have to ask X amount of questions, okay, pointed in different areas. And we do that but personally, I like to get to know the client. Now get like to ask a lot of questions. And only by asking questions, do I understand what the client needs, what type of service they require? And what type of what type of portfolio or combination of portfolios we want to offer them? Okay, so it toxic a really comes down to talking, and, and communicating. So, our very first interview is really get kind of a meet and greet and get to know. Okay, so I want to know about so one of the very first questions I’ll ask, in addition to you know, the vanilla paint by number questions is, when the market does another 2008, where the S&P lost 52%, within a 15-month rate basis, this happened in 2000, started in tooth out the end of 2007 went to the beginning of 2009. If the market or if and when the S&P or the market resets, because we’ve been up, up, up, up and away for the last 15 years. Absolutely. If the market loses 30%, how much are you willing to see your portfolio evaporate at and so we’ll then they’ll talk percentage as well. 10% 15%. So okay, let’s put a numeric value on it. Let’s assume you have a million dollars in your portfolio for retirement or 2 million, we’ll just take 1 million for an example. And the market drops 50%. That means you now have $500,000; the market needs to make 100% Just to get back to the million. So, I’ll explain that to folks. Now. If your market drops 30%, and you have a million dollars in your portfolio, are you willing to lose 300,000 I put a numeric value. And normally the husband’s when I’m with a couple say, yeah, that’s okay. And it’s gonna say a whole nother ratio? No, no, no. So, what we want to do is we want to talk not just in terms of percentages, we want to talk in terms of numeric amounts. The other thing is, I want to see what their retirement plan looks like, how do they maximize their Social Security? Do they have a pension, do husband and wife have a pension? So, we need to look at other income before we can really accurately help an individual to determine truly what their risk tolerance is. Many times, with folks without a pension because I’m a firm believer in having mailbox money, you have social security, but you can’t just depend on distributions from your portfolio. So, this is one of the many ways that we help an individual determine the proper risk tolerance for, for the for their family,
Which is so critical to know Phil, especially in the retirement year. So, this is a very important topic for us to be on today. Before we dive in even further, I know that you’ve set aside a certain amount of spots this week for new viewers and new visitors to the studio to the show, I should say to the office, that’s where I was really going somewhere. Let’s talk about what that is.
For those of you who are viewing today, whether you’re new viewers or whether you’ve been watching us for years, dial 888-818-6557. Tell the operator you want to come in to have us run a Morningstar report and portfolio observation and review to number one, determine what does your current portfolio risk tolerance look like? Many times, I’ll talk to clients, and they’ll say, Oh, I think it’s 10%. And when we run the Morningstar report, we’ll find it their drawdown is 30%. So, and then we can help you make adjustments. It’s complimentary. Our Morningstar reports are done by certified financial planners, as Certified Financial Analyst. They are not folks that sell products. They simply are number crunchers crutches. So, snap the QR code or dial the 888 first five callers come on in. Let’s talk about your risk tolerance, and maybe what changes in adjustments. Remember, folks, there’s no obligation to work with us. We simply want to help educate you.
Phil, thank you so much to our viewers at home. That number to call is 888-818-6557 this is the perfect opportunity for you to claim one of those spots that Phil has set aside If you have questions about your risk tolerance questions about planning your retirement, this is the opportunity for you today. If you don’t have a pen that’s Okay grab your smartphone, click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and Tax landing page. You can claim your spot accordingly. We’re gonna take a very short commercial break here on retire smart Austin, we’re talking all about your risk tolerance, how that ties into a very holistic retirement plan. Stay tuned.
For most folks who are getting ready to retire, they’ve spent 30, 40, 50 years paying into Social Security and they haven’t a clue on what claiming strategy best works for their plan. You should feel comfortable, you should feel safe. You should be educated by your financial advisor in all aspects law, taxes, inflation, your wealth management, including your insurance products as well. Working with a financial advisor that has their own tax firm, has their own legal arm and their own wealth management and insurance firm really ties it together. What folks enjoy most of all, is working not only with a fiduciary, but they want to work with someone that does it all. They want to come in they want to do their Roth conversions. They want to do their tax returns. They want to update their wills and their trust, and they want to come to one firm that has all of that expertise inside of it. That’s Empower Wealth.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio joined today by Phil Capriatti Sr of Empower Wealth and Tax and we are talking all about understanding and knowing your risk tolerance and how that plays a factor in your holistic, peaceful retirement years. Phil, I have to ask you a question, obviously, that comes to mind for me specifically would be when you’re analyzing someone’s risk tolerance, does it ever tie or correlate to someone’s age?
Yeah, it always does. As a matter of fact, that’s really one of the most important variables that need to be considered is the individual’s age. Also, we also want to take a look at the individual and their family’s life expectancy, we want to make sure that the client number one has increasing income to cope and keep up with inflation. But we really want to make sure that the client doesn’t run out of money when they reached in their, into their 80s, or even their 90s. So, considering risk tolerance, when we build a portfolio and age is extremely important. What I like to do with most folks and what they enjoy, there are many investments that we can use to ensure guaranteed income and return. So, they’re unaffected by market volatility. Many advisors nowadays that work with the big box retailers, and we all know who they are, they’re on every single corner of every block anymore, aren’t allowed to sell these types of products. In fact, many I personally think it’s a disservice to the individual. But that’s irrelevant. So many folks are simply happy having an investment portfolio that guarantees them 6% A year return 7% A year return. Many times, what we’ll do with risk tolerance is we’ll say, look, let’s look at your Social Security. Let’s make that tax efficient. Now let’s talk about investments. How about if we set up an income plan that guarantees your income for until you reach 100? Plus, then we can become a little more aggressive when it comes to increasing returns. Okay, okay, because we don’t have the entire portfolio in the market. So, this is something that folks once it’s properly explained, especially by a licensed fiduciary, they get it, they understand it, because two of the main problems or main concerns that retirees face is number one running out of money before they run out of life. And the other one is spending time or having to be committed to a nursing home or rehab center. There are the two primary concerns. So, when we’re looking at risk tolerance and age, things change my risk tolerance when I was 40 is totally different than my risk tolerance at 50, 70, 80, and so forth. So, we want to adjust risk tolerance and draw down based on several factors the client’s age, and also their appetite for market volatility.
Okay, Phil, I have to ask you, you mentioned the Morningstar report to our viewers at home that don’t know exactly what that is. What does that process look like? What does a Morningstar report unveil?
That’s a great question. That’s an excellent question when we run a Morningstar report, Morningstar is an independent agency and many large financial institutions use it once to measure the risk, the return internal fees of each and every investment you have. So, if you own a stock, the internal fees, there are none. Okay? Unless you’re working with some kind of a crazy advisor, okay, that’s charging for that, when we’re talking about an ETF, or a mutual fund ETFs have relatively small internal fees. So, we want to look at how much am I paying that those a group of managers managing that mutual fund each year before I get paid? So, this measures, internal fees, almost 90% of the folks that come into our office and have us run a Morningstar report have no idea what their internal fees are. The next thing and the next variable that the Morningstar report measures is volatility and return. Okay, so for instance, we want to take a look at how did this particular mutual fund or ETF or portfolio react during the pandemic? How much volatility or drawdown? What was what was in it? How about the China slowdown? How about the financial crisis of 2008? What happened during 911 during a terrorist attack? Now, we want to measure these and the reason we measure it is because past, when we take a look at past data, it helps us to understand what we can expect if we see a repeat performance of this in the future. So all of this goes into measuring risk tolerance, the Morningstar report cost us 1000s of dollars to do for our clients and potential clients, we love to do it because it’s our way of number one, educating the clients because senior Empower Wealth and tax is all about educating the clients and to bring them to a 0% tax bracket in retirement. But we also want to moderate their volatility. So, the Morningstar report helps me to explain it to you, you get a copy of it, and also, you’ll understand it. So again, it’s about teaching and training, takes a lot of time takes it takes a lot of resources. But I believe it’s the only way to truly be a complete, licensed fiduciary and do the best service you can for your client, existing clients and potential clients.
So, it truly is a deep dive X ray into a true portfolio performance, I should ask you, our people often really amazed and sometimes shocked to know that they’re taking much more risk than what they even thought they were taking.
Number one, they’re shocked in many cases, especially when they think their risk tolerance was conservative. And we find out that they’re balanced their growth, where they think that they their portfolio can’t lose more than 10%, which is the way we build portfolios, I build it from the ground up. Okay, how much are you willing to lose them, we build the portfolio around, around the risk tolerance, okay. And we make changes along with age. Many folks after they we run that Morningstar report and portfolio observation that gives them recommendations, how to make changes based on their specific risk tolerance, because many folks don’t even know what their risk tolerance is. They don’t know. Very true. Yeah. So they’re, it’s amazed. And then we give them an entire PDF. And then after that, we’ll schedule a follow up final appointment for a Q&A. I wanted to explain it to them in the office, and all of our advisors do that. We want to give them portfolio observations and recommendations, let them take it home and digest it. And then a week or so later, we invite him back into the office to do questions and asked her answers to fine tune it. It’s amazing. In fact, we started doing this over 10 years ago. And I attribute that to the amazing growth that we’ve seen over the last 10 plus years.
How often do you recommend rebalancing a portfolio? Phil, we’re gonna take a quick commercial break in just a moment.
Love it. We so it depends if it’s a taxable portfolio, we just implemented new software that actually does tax harvesting monthly, okay. All right. So, it rebalances monthly, okay. And that’s really great because that frees up money to, to, to purchase other types of investments, maybe we want to there’s a new company and a AI or what have you. So, we want to keep that portfolio truly diversified. The portfolio you had five years ago, looks should look totally different than a portfolio you have today. Okay. All right. So, we normally rebalance the portfolio on average four times a year quarterly, but for most of our clients, but for some clients that have a lot of money in not taxable accounts, not tax deferred accounts, but they have a lot of it in taxable accounts, where they have to pay taxes on the interest in dividends. We like to do tax harvesting monthly. Clients love it. Wow.
Well, Phil, thank you so much time for our second commercial break. To our viewers at home, there’s a number to call on your screen 888-818-6557. What Phil and his team have done this week is to set aside five spots for new viewers to the show. This is your opportunity to claim one of those spots and to learn if you’re taking too much risk. Do you know your risk tolerance? There’s a series of questions that you can answer with Phil and his team to know if you are exactly on the right path for your comfortable retirement years. Again, 888-818-6557 is the number to call in or if you have your smartphone handy, you’re always welcome to pick that up click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and tax landing page you can claim your spot accordingly. We’re gonna take a very short commercial break here on retire smart Austin don’t go anywhere. We’re talking all about risk tolerance. We have so much more when we return.
You know in October of 1987, the stock market dropped 22% And what became known as Black Monday in April of 2000 the.com bubble burst dropping the market 25% And the banking and mortgage crisis of 2008 plummeted the entire global market. 37% in a matter of weeks today, rising interest rates and raging inflation has caused the markets to drop significantly with no end in sight. During these volatile times, you want to be assured that your retirement investments are being managed by an experienced financial adviser who know how to weather the hardest of economic storms do you want to take the next financial crisis alone call me and my team here at Empower Wealth and Tax using the number below. The closer you are to retirement, the more important it is to work with a team of professional licensed fiduciaries here at Empower Wealth and Tax. Thank you very much and have a blessed day.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio joined today by Phil Capriatti Sr of Empower Wealth and Tax and we’re talking all about risk tolerance. And do you know your risk tolerance for your retirement years? So, one of the things that we’ve spoken about recently in between shows are the people that have called in at one point or the other. And they’re like, You know what, Phil, I am not going to take any risk. I’m terrified of risk, I’m going to take all of my money, grab it stuffed under the mattress, I’m going right to cash. What do you say to those folks?
Oh, shame, shame. Shame is what I normally say. You do not have to go strictly to cash or gold or some other precious metal to keep your money safe. This is why it’s extremely important to hire an investment advisor who’s a licensed fiduciary. And when I say that I mean it. For instance, many folks come in, and I asked them, How did you do in 2023? And, and I’ll get one of these. I went to cash. Interest rates were so high, I put it in a CD, and I’m getting four and a half, five, five and a half percent. I said okay, all right. I can understand that. I understand that. But you have to understand you just missed one of the largest run ups because of the explosion of AI, our AI growth portfolios, and again, in moderation. Yes, they average 34% Return Yeah, yeah. So, you can’t miss that a lot of return with little risk with respect to knowledge. So, what we want to do is we want to look at analytics. Where is the market going based on geopolitical events, economic events, when we saw the AI explosion, we immediately went into a percentage of the clients, I made calls with my clients. And I said, Look, I’m recommending we move percentage of your money 10% 15 20% into large cap growth, we want to take advantage of this. And by making adjustments in your portfolio, we can still reduce your volatility or your risk tolerance. Because again, the expectations and the probability of this sector doing extremely well was very high, very, very little risk. So, with those of you who have gone to cash the problem with cash is it simply does not keep pace with inflation. And if you run like a scared bunny, and I mean that I truly mean that without getting professional help and advice and the analysis that’s necessary in order to get you the best return for the least amount of risk. Cash just doesn’t get it done. I agree. It really doesn’t.
That’s interesting to me fell in that kind of correlates with just emotional finance, if you will, behavioral finance because so often we hear about people making emotional decisions. That’s the perfect example. How do you help people stay calm when there’s such turbulent times?
Well, first of all, ongoing communication. So, with our, with our company, we mail tune newsletters every single week. I mail a wealth management newsletter, which lets our clients and potential clients know what our analysts and senior portfolio managers are doing. What is the market doing? What are we doing in response to what the markets doing? Are we putting risk on or taking it off. The other thing that we do is we send out a tax newsletter. As an ED slot mastery, lead Ira advisor, it’s extremely important that folks understand the changes that the government makes each year, sometimes each month in distribution strategies. So, we send out that tax newsletter to keep people educated and informed weekly. We also do a in addition to meeting with clients, my clients meet with me, normally anywhere from three to five times a year in person unless they, they want to do a zoom meeting, but I like the person to person. Absolutely. In addition to that, I also do a zoom meeting with all of my clients every six weeks nice just to bring them up to date. And then anyone that has and we make portfolio recommendations. And if a financial advisor is not exercising and taking all of these steps towards their clients, they simply enforce off concern under appreciating their client. The clients need to know because knowledge is the is half of the battle. Once you have the knowledge, the fear subsides absolutely when you do not have knowledge, okay, and you have uncertainty, you can become more and more frightened. So again, it’s education, ongoing education. It’s a beautiful thing.
It really is filmed, I know that you’ve set aside a certain number of spots this week, let’s talk about what that is one more time. Before we say goodbye to our viewers.
We focus today on portfolio management and risk and levels of risk tolerance. I want everyone who’s watching today, dial 888-818-6557. We’ll take the first five callers or click the QR code. We want to run a Morningstar report on your portfolio. Whether it’s an IRA, a taxable account, a Roth IRA, it’s extremely important that you understand the risk. We want to under we want to outline what are your internal and external fees, what are you paying for the funds, what are you paying through manager and then give you recommendations all the changes to make take advantage of our expertise and our knowledge dial the number and I look forward to seeing you in our office.
Phil, thank you so much to our viewers at home thank you for spending time with us today on retire smart Austin. This is your opportunity to claim a one of those spots that are available with Phil and his team. Be safe, be happy and be blessed. We look forward to seeing you back one week from today on retire smart Austin with Phil Capriati, senior of Empower Wealth and tax. Take care.
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